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Your Wallet and The New 2025 Big Beautiful Tax Bill: 6 Things Business Owners Need to Know

Aug 3, 2025 | Finance, Tax Strategies

Your Wallet and The New Tax Bill: 6 Things Business Owners Need to Know. 2025 Big Beautiful Bill

Your Wallet and The New Tax Bill: 6 Things Business Owners Need to Know

For all you business owners, entrepreneurs, freelancers, and side-gig hustlers… The recently passed “One Big Beautiful Bill” (OBBB) has brought about some significant changes that could impact your bottom line.

Good News: many of these policies are actually quite favorable for business owners. Let’s break down what it means for your wallet:

1. Qualified Business Income (QBI) Deduction

The 20% QBI deduction, a fantastic benefit for many business owners, was set to expire in 2026. However, the OBBB has permanently extended it, effective 2026.

This means you can continue to receive a 20% deduction on your qualified business income, subject to some limitations:

  • The phase-in amounts for this deduction have increased: from $50,000 to $75,000 for single filers, and from $100,000 to $150,000 for those married filing jointly.
  • There’s a new minimum deduction of $400 if your business income is at least $1,000. So, if your side hustle brought in $1,200 in net income, your deduction would be $400 (which is greater than 20% of $1,200, or $240).

2. 1099 Reporting

If your business makes payments to certain individuals or entities, you’re familiar with the 1099 reporting requirements.

  • The general 1099 threshold for payments to trade or business individuals (Forms 1099-NEC and 1099-MISC) is increasing from $600 to $2,000, effective 2026, and will be adjusted for inflation after that.
  • Perhaps even more impactful is the change to the 1099-K form limit (for apps like eBay, Uber, PayPal, and Venmo). This threshold is increasing significantly from $600 to $20,000 AND 200 transactions, retroactively applied to 2022. This is a massive administrative relief for many business owners and those with side gigs, reducing the paperwork burden.

3. Qualified Small Business Stock (QSBS)

Thinking of selling your business? If you have C-corp stock and have heard of QSBS, you know it can allow you to pay 0% capital gains tax on up to $10 million in gains, provided the stock is held for 5 years and the company’s assets are under $50 million. The OBBB has made some exciting changes for stock acquired after July 4, 2025:

  • Tiered Holding Periods:
    • If held for 3 years: 50% exclusion
    • If held for 4 years: 75% exclusion
    • If held for 5 years: 100% exclusion
  • Increased Gain Exclusion Cap: The gain exclusion cap has been raised from $10 million to $15 million, adjusted for inflation beginning in 2027.
  • Higher Asset Threshold: The maximum aggregate gross assets a corporation can have to issue QSBS has increased from $50 million to $75 million, adjusted for inflation beginning in 2027. This significantly expands the pool of businesses whose stock can qualify.

4. Bonus Depreciation

Great news for businesses looking to invest in new assets!

  • The tax bill revives 100% bonus depreciation for qualifying property acquired and placed in service on or after January 19, 2025. This allows businesses to immediately deduct the full cost of eligible new or used property, rather than depreciating it over several years.
  • This can be particularly beneficial for new businesses that might not have enough income to fully utilize Section 179 (which has income limitations).
  • Qualified Production Property (QPP) Expensing: The OBBB also introduces a new 100% depreciation allowance for “qualified production property” (QPP). This specifically targets newly constructed non-residential real property used in U.S.-based manufacturing, production, or refining activities. Construction must begin after January 19, 2025, and be placed in service by January 1, 2031. This is a significant incentive for capital-intensive industries.

5. Section 179

The new tax bill has increased Section 179 limits!

  • You can now immediately deduct (instead of depreciate) machinery, equipment, vehicles, and other eligible property up to $2.5 million, a significant jump from the previous $1.25 million for 2025.
  • The phase-out amount, where the deduction begins to be reduced, has also been raised to $4 million. These limits will continue to be adjusted for inflation annually.

6. Business Interest & R&D

The OBBB offers further relief for businesses regarding interest deductions and research & development.

  • Business Interest: The bill permanently reinstates the EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) limitation for business interest deductions, effective for tax years beginning after December 31, 2024. This generally allows businesses to deduct more of their business interest, providing significant cash flow benefits.
  • Research and Development (R&D) Expensing: The bill brings back immediate expensing for domestic research and development (R&D) expenses for tax years beginning after December 31, 2024. This reverses a prior change that required R&D costs to be amortized over five years.
    • Retroactive for Small Businesses: Eligible small businesses (generally those with average annual gross receipts under $31 million for the three preceding tax years) can elect to retroactively expense domestic R&D costs paid or incurred in tax years beginning after December 31, 2021. *This could allow for amended returns to claim refunds for prior years.

Other Notable Provisions for Business Owners:

  • Qualified Opportunity Zones (QOZ) Extension: The OBBB permanently extends and modifies the Qualified Opportunity Zone program. This provides long-term certainty for investors looking to defer capital gains by investing in economically distressed communities. New reporting requirements are also being implemented.
  • Temporary Increase in SALT Deduction for Individuals (Indirect Business Benefit): For individuals, the OBBB temporarily raises the State and Local Tax (SALT) deduction cap from $10,000 to $40,000 (with a phase-out for higher earners) through 2029. While this is an individual deduction, it can indirectly benefit owners of pass-through entities (like sole proprietorships, partnerships, and S-corps) whose business income flows through to their personal returns.
  • Changes to International Tax Framework: For businesses with international operations, the OBBB significantly modifies aspects of the U.S. international tax framework, including changes to Global Intangible Low-Taxed Income (GILTI), Foreign-Derived Intangible Income (FDII), and the Base Erosion and Anti-Abuse Tax (BEAT). These are complex changes that could impact multinational businesses’ effective tax rates and foreign tax credit utilization.

In Summary

These changes offer some fantastic opportunities for business owners to save on taxes, reduce administrative burdens, and incentivize investment. As always, the details matter, so consult with your tax professional to understand how these new provisions specifically apply to your unique business structure and financial goals.